In another example of a local savings institution working to ramp up its commercial banking, First Federal Lakewood has hired five commercial lenders since last April, and will welcome another this spring.

Like other traditional savings institutions, the Lakewood-based mutual bank largely has done lending related to real estate, such as residential mortgages and commercial real estate loans.

Also like a number of local savings banks — among them CFBank in Fairlawn and Geauga Savings Bank in Newbury — First Federal Lakewood is spending money to do more lending to small businesses.

First Federal Lakewood's aim is to grow both commercial and industrial loans and commercial real estate loans from a quarter of the bank's loan assets to half over the next few years, president and CEO Tom Fraser said.

“Our job as a mutual is to ensure we're providing access to credit in our communities,” Fraser said. “This is an additional way to do it. It helps stabilize our asset mix and helps diversify our deposit mix as well.”

Though First Federal Lakewood has done commercial lending in the past, it mostly was tied to commercial real estate, said Jeff Bechtel, senior vice president and chief lending officer, who joined the bank last April.

Bechtel said the bank, through hires such as his and internal reassignments, made a concerted effort last year to expand its capabilities in commercial and industrial lending, which typically is collateralized with accounts receivable, equipment and inventory.

One new hire joined First Federal Lakewood from Park View Federal Savings Bank and another is from Ohio Commerce Bank; both institutions were acquired by out-of-market banks last year. First Federal Lakewood will add another commercial banker next month, according to Bechtel.

The additions bring the headcount of the commercial and industrial, or C&I, lending team to seven, and a new hire on the commercial real estate team brings its headcount to four.

Members of the C&I team will focus on serving companies with annual revenue of up to $30 million, and one banker will work to grow First Federal Lakewood's business in western Cuyahoga County and Lorain County, Bechtel said.

Where the money is

Howard T. Boyle, president and CEO of Hometown Bank, a Kent-based savings institution that has done commercial and industrial lending for more than a decade, has observed more of his brethren becoming competitors in the space. A big reason why, Boyle said, is because “that's where the money is.”

Commercial loan rates, he said, are roughly 4.75% to 6%, compared to somewhere around 3.5% for a standard mortgage loan.

The added competition is beneficial for borrowers, Boyle noted.

“The businesses are going to win,” he said. “We (institutions) are going to be much more competitive on interest rate ... and if you're not, you're not going to get the loan.”

Lending more to businesses also can benefit the institutions, said Charlie Crowley, managing director for Boenning & Scattergood Inc., an independent securities, asset management and investment banking firm.

“For the banks that do it well, it'll help their shareholders,” Crowley said. “With a more balanced loan portfolio, a given bank can have a better degree of stability through different interest rate cycles and different economic cycles.”

Branching into Cleveland

Besides its investment in business lending, First Federal Lakewood also is investing in the city of Cleveland.

The bank revealed that it will open this summer its first full-service branch in the city near the Capitol Theatre in the Gordon Square district. The branch, at 6610 Detroit Ave., will be its 19th. Its loan production office at West 45th Street and Detroit Avenue will remain.

“The neighborhood we're moving into, we've had a long and successful track record in serving that community,” Fraser said, citing several hundred deposit customers in the 44102 zip code.

The mutual also is eyeing expansion in other parts of Northeast Ohio, and expects there will be acquisition opportunities, Fraser divulged. That said, the bank prefers to grow through its own operations, and the cultural fit with any acquisition target must be right, Fraser stressed.

With loan production offices in Columbus, Toledo and Akron, First Federal Lakewood is “looking possibly at expanding services offered in those locations down the road,” Fraser said. It counts 11 loan offices in all.

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